Quotes from “The Significance of Monetary Disequilibrium”

By Leland Yeager (1986)

• Any particular output thus constitutes demand, either at once or eventually, for other (noncompeting) outputs. Since supply constitutes demand in that sense, any apparent problem of general deficiency of demand traces to impediments to exchange, which discourage producing goods to be exchanged. #
  EconomicsMoneyBusiness cycle
• Price changes tend to correct or forestall the monetary disequilibrium but do not and cannot occur promptly and completely enough to absorb the entire impact of the monetary change and so avoid quantity changes.#
  EconomicsMoneyBusiness cycle
• One cannot consistently both suppose that the price system is a communication mechanism—a device for mobilizing and coordinating knowledge dispersed in millions of separate minds—and also suppose that people already have the knowledge that the system is working to convey.#
  EpistemologyMoneyEconomics
• A businessman’s difficulties in finding profitable customers or a worker’s in finding a job are unlikely to trace wholly, and perhaps not even mainly, to his own pricing policy or wage demands.#
  Business cycleEconomics
• One of the market system’s virtues is that it does not require or impose collective decisions. The dispersion of knowledge and the fact that certain kinds of knowledge can be used effectively only through decentralized decisions coordinated through markets and prices—rather than coordinated in some magically direct way—is one of the hard facts of reality. It forms part of the reason why monetary disturbances can be so pervasively disruptive: they overtax the knowledge-mobilizing and signaling processes of the market.#
  MoneyEconomicsBusiness cycle
• Taking the lead in downward price and wage adjustments is in the nature of a public good, and private incentives to supply public goods are notoriously inadequate.#
  EconomicsBusiness cycle
• In tackling questions about the long-run effects on prices and outputs of specified changes in wants, resources, technology, and legislation, one may legitimately neglect intervening disequilibrium to get on with the analysis. But when questions of macroeconomics are at issue—essentially, questions concerning disruptions or imperfections or delays in processes working to coordinate the plans and activities of many different people—then attention properly turns to how quickly and smoothly markets respond when disturbed, to transitional stages, and to the frictions of reality.#
  EconomicsMethodologyEquilibrium
• The very fact that no one sees himself as having any appreciable influence over the value of the money unit helps explain the sluggishness of the pressures working to correct a disequilibrium value.#
  MoneyEconomicsBusiness cycleEquilibrium

G. Poulett Scrope, Principles of Political Economy (1833)

• A general glut—that is, a general fall in the prices of the mass of commodities below their producing cost—is tantamount to a rise in the general exchangeable value of money; and is a proof, not of an excessive supply of goods, but of a deficient supply of money, against which the goods have to be exchanged.#
  EconomicsBusiness cycle